Chile takes center stage in strong LatAm market

Paul Kilby

3 MIN. DE LECTURA

NEW YORK, May 19 (IFR) - LatAm credit markets got a solid start on Tuesday as the Republic of Chile took advantage of a rally in Europe and renewed appetite for risk to announce a dual-tranche euro offering.

Bonds yields tumbled in Europe on news that the ECB would speed up its bond buying program, sending the 10-year German Bunds down to 0.63%.

And while US rates have subsequently backed up after data Tuesday showed US housing starts hitting their highest level in about 7.5 years, investors are taking the move in their stride.

Yields on the 10-year benchmark were back at 2.30% on the news, up about 15bp from the 2.15% seen Friday, but LatAm credit remain well supported.

“It seems like last week’s taper tantrum is a thing of the past,” said a New York based trader. “Customers are more willing to take risk (this week).”

A new three-year bond issued by Brazil’s largest private bank Itau-Unibanco was being bid at 100.125, off an earlier high but comfortably above reoffer of 99.971.

That bond along with the 2021s issued by Brazilian oil company Petrobras - which enjoyed a decent rally Monday on stronger than expected results - were the two most active bonds being traded this morning.

The 2021s were weaker in price terms Tuesday but still enjoying some spread tightening to be quoted earlier at around 418bp-412bp.

Final guidance on the minimum-sized 250m tap of its 2025 bond has been set at 60bp over the interpolated mid-swaps curve, while guidance on the euro-denominated 15-year bond has been fixed at mid-swaps plus 85bp-90bp.

Leads HSBC, JP Morgan and Santander earlier revised talk on the tap from initial price thoughts of 65bp-70bp to 65bp area. It is a similar story on the new 15-year, which saw guidance tightened from IPTs of 95bp area to mid-swaps plus 90bp-95bp. The deal is expected to price later today.

“It is way for Chile to diversify its funding base and get a low nominal yield,” said a syndicate official. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)